Week in Review

---

Week in Review

06/18/2022

For the week 6/13-6/17

[Posted 8:30 PM ET, Friday]

Note: StocksandNews has significant ongoing costs, and your support is greatly appreciated.  Please click on the gofundme link or send a check to PO Box 990, New Providence, NJ 07974.

Edition 1,209

Mortgage rates climbed at their fastest pace this week since 1987, as inflation re-accelerated and the Federal Reserve raised its benchmark interest rate, as discussed in depth below.

According to Freddie Mac’s primary mortgage survey, the rate on a 30-year fixed mortgage averaged 5.78% as of June 16, up from 5.23% the week before – and 2.93% this week a year ago.  Another barometer, courtesy of CNBC, puts it at 6.03%, up from 3.10% at yearend (though down from 6.28% earlier in the week).

The big spike has led to the housing market hitting a wall at rapid speed.  Mortgage demand is suddenly less than half what it was last year, and now in many parts of the country, you aren’t getting multiple bids on a property…and soon actual prices will be coming down.

Housing is a key sector of the economy, so any slowdown hurts employment, but at least it helps on the affordability front.

So between the Fed hiking rates, and signaling further increases to come for the foreseeable future to crush inflation, a slowdown in housing, declining consumer confidence, and a bear market in stocks, there is real cause for concern the economy is tipping into recession sooner than most thought.  This coming earnings season is going to be interesting.

More to follow.

---

Russian President Vladimir Putin delivered a combative speech today at an annual Economic Forum in St. Petersburg, saying that Russia’s economy had weathered a Western sanctions “blitzkrieg” imposed after Moscow’s ‘intervention’ in Ukraine. 

Putin accused the United States of treating other countries as “colonies,” and said gloomy forecasts for the Russian economy had not been fulfilled.  Amid a lengthy denunciation of the U.S. and its allies, Putin said: “Nothing will be as it used to be in global politics.”

He said the “special military operation” was difficult but needed in order to demilitarize Ukraine and rid it of nationalists threatening Russian speakers there. 

Among other things, Putin also said the European Union had lost its “political sovereignty,” and that the EU had started down a track that would lead to radicalism and changeover of elites, as he criticized the EU’s economic policies such as “printing money” to address high inflation and inequality.  He also attacked the West for blaming him personally for its economic troubles, and said Russia’s actions in Ukraine had nothing to do with high inflation in developed countries.

Vlad the Impaler also claimed Russia stood ready to boost its exports of grain and fertilizers, and that Russia would send food exports to Africa and the Middle East. [Highly doubtful.]

The war has turned into a grinding artillery battle where Russia is gaining ground thanks to its overwhelming advantage in firepower.  Ukraine needs a rapid increase in military assistance.

The war is also about the eastern city of Severodonetsk, and its twin city of Lysychansk, the two key targets for Russian troops.

Russian success in the Donbas could lead to annexation by Moscow of the entire region.

And so, as Putin’s War unfolded this week….

--Saturday/Sunday….

A military adviser to President Zelensky said Saturday that roughly 10,000 Ukrainian soldiers have been killed since the Russian invasion began.  At least 200 to 300 Ukrainian soldiers are being killed each day, said Oleksiy Arestovych, who claimed Russia has suffered even greater losses.  It’s impossible to verify the figures.

Zelensky said it was “too late” to persuade Russia to end its invasion, calling on the world to avoid compromise with Moscow and take stronger action against Russia.

His comments, delivered via video at the Shangri-La Dialogue, an annual security summit in Singapore, came a week after French President Macron sparked the ire of Ukraine and Eastern European allies when he said it was crucial not to “humiliate” Russia, to preserve the option of a diplomatic resolution to the conflict.

France walked Macron’s comments back, with a presidential official telling reporters that France wants a Ukrainian victory and was unwilling to make concessions to Russia.

--European Commission President Ursula von der Leyen traveled to Kyiv on Saturday.  One of the topics was Ukraine’s desire to join the European Union, and the EC was expected to make a recommendation on Ukraine’s “candidate status” soon.

But some EU diplomats are saying Ukraine might be decades away from membership.

--President Biden stupidly said Zelensky “didn’t want to hear it” when U.S. intelligence officials warned of a Russian attack before the Feb. 24 invasion.

“I know a lot of people thought I was maybe exaggerating, but I knew, and we had data to sustain, he was going in off the border.  There was no doubt.  And Zelensky didn’t want to hear it, nor did a lot of people,” Biden said Friday during a political fundraiser in Los Angeles. 

Ukrainian officials rejected Biden’s account that his administration’s warnings had fallen on deaf ears in Kyiv.

We all know President Zelensky didn’t want to take Moscow’s threats as seriously as he should have, if you believed U.S. intelligence, and I for one did.

But there is ZERO reason to bring it up NOW!  Just an incredibly stupid thing for the president to do.  Why would you undermine Zelensky in any possible way at this point?! 

--According to new research by Amnesty International, Russia has killed hundreds of civilians in the northeastern city of Kharkiv using indiscriminate shelling and widely banned cluster munitions.

Amnesty said it has found evidence of Russian forces repeatedly using 9N210/9N235 cluster bombs, as well as “scatterable” munitions – rockets that eject smaller mines that explode later at timed intervals.

--Ukrainian forces estimate that they have one artillery piece per 10 to 20 Russian ones on the front lines, with each of these guns allotted only a fraction of the ammunition at the Russian gunners’ disposal.

--The bodies of scores of Ukrainian fighters killed during the siege of the Azovstal steelworks in the southern city of Mariupol are still awaiting retrieval, the former commander of Ukraine’s Azov National Guard regiment said on Sunday.

Maksym Zhorin said that under the terms of a recent exchange, around 220 bodies of those killed in Azovstal had already been sent to Kyiv but “just as many bodies still remain in Mariupol.”

Hundreds of fighters holed up in the steelworks were taken into Russian custody in mid-May but many were also killed during Russian attacks on the plant and the city.  Because the majority of the bodies were in a terrible state, “it will take a very long time to identify each person personally,” Zhorin said. DNA testing and servicemen’s uniforms and insignia would be used to help with identification.

[Tuesday, around 60 bodies from both sides of the battle were repatriated.]

Monday….

Reports suggested Russia controls 70% of Severodonetsk.  All three bridges to the key city have been destroyed, the regional governor, Serhiy Haidai, said, making the evacuation of residents and the transportation of goods impossible.

A pro-Russian separatist leader says Ukrainian troops in Severodonetsk must “surrender or die” because “there is no other option.”

Only around 15,000 people, from a pre-war population of 100,000, are still believed to be there.

Severodonetsk and it twin city, Lysychansk, form an important regional and industrial focal point in the Luhansk region of eastern Ukraine.

Capturing the two would give Russia control of the entire Luhansk region – parts of which are already controlled by Russian-backed separatists.

--Russia’s Defense Ministry said its missiles had destroyed a large quantity of weapons and military equipment in the eastern Donbas region, including some that had been sent by the United States and European nations.  The ministry said high-precision air-based missiles had struck near the Udachne railway station, hitting equipment that had been delivered to Ukrainian forces.  There is no way to verify this.

--UN human rights chief Michelle Bachelet warned that the war risks plunging millions into food poverty across the globe, as Ukrainian officials say the country’s grain harvest is likely to drop by almost half this year.

Last week, Ukraine’s deputy agriculture minister said up to 300,000 tons of grain may have been stored in warehouses that Kyiv says were destroyed by Russian shelling the prior weekend.

--Kremlin spokesman Dmitry Peskov said Russia’s main goal is to protect the Donetsk and Luhansk people’s republics.

“In general, the protection of the republics is the main goal of the special military operation,” Peskov said.

Tuesday….

--NATO must build out “even higher readiness” and strengthen its weapons capabilities along its eastern border in the wake of Russia’s invasion of Ukraine, Secretary General Jens Stoltenberg said after talks with various European leaders in the Netherlands, ahead of a NATO summit in Madrid end of the month.

Responding to a call by Ukrainian President Zelensky earlier Tuesday for more long-range weapons, Stoltenberg said he agreed that Kyiv should be supplied with more heavy weaponry, but provided no details.

“In terms of weaponry, we stand united here that it is crucial for Russia to lose the war,” Dutch Prime Minister Mark Rutte told reporters in The Hague.  “And as we cannot have a direct confrontation between NATO troops and Russia, what we need to do is make sure that Ukraine can fight that war, that it has access to all the necessary weaponry.”

Asked about Sweden and Finland’s applications to join the alliance, Stoltenberg said he was seeking “a united way forward” to resolve opposition from Turkey, which has been angered by what it deems as Swedish support of Kurdish militants.

Following Russia’s invasion, NATO has boosted its presence in the Baltics.  Stoltenberg said NATO will deliver a further strengthening of the alliance when all 30 members meet June 29-30.

--Pope Francis took a series of new swipes at Russia for its actions in Ukraine, saying its troops were brutal, cruel and ferocious, while praising “brave” Ukrainians for fighting for survival.

But in the text of a conversation he had last month with editors of Jesuit media and published on Tuesday, he also said the situation was not black and white and that the war was “perhaps in some way provoked.”

While condemning “the ferocity, the cruelty of Russian troops, we must not forget the real problems if we want them to be solved,” Francis said, including the armaments industry among the factors that provide incentives for war.  “It is also true that the Russians thought it would all be over in a week.  But they miscalculated.  They encountered a brave people, a people who are struggling to survive and who have a history of struggle,” he said in the transcript of the conversation, published by the Jesuit journal Civilta Cattolica.  “This is what moves us: to see such heroism. What is before our eyes is a situation of world war, global interests, arms sales and geopolitical appropriation, which is martyring a heroic people,” he said.

Francis said that several months before Vladimir Putin sent his forces into Ukraine, the pontiff had met with a head of state who expressed concern that NATO was “barking at the gates of Russia” in a way that could lead to war.  Francis then said in his own words: “We do not see the whole drama unfolding behind this war, which was perhaps somehow either provoked or not prevented.”

Asking himself rhetorically if that made him “pro-Putin,” he said: “No, I am not. It would be simplistic and wrong to say such a thing.”

In his comments, Francis also noted Russia’s “monstrous” use of Chechen and Syrian mercenaries in Ukraine.  Francis said he hoped to meet Russian Orthodox Patriarch Kirill, Putin’s butt-boy, at an inter-religious event in Kazakhstan in September.

Francis said last month that Kirill could not become “Putin’s altar boy,” prompting a protest from the Russian Orthodox Church.  In the conversation with the Jesuits, Francis said he had told Kirill during a video call in March: “Brother, we are not clerics of the state, we are pastors of the people.”

Wednesday….

Russia’s invasion was at a “pivotal” moment and the United States and its allies could not lose focus on the three-month long conflict, Defense Secretary Lloyd Austin said during a meeting of dozens of defense ministers in Brussels.

The meeting is focusing on weapons deliveries to Ukraine, the nation needing 1,000 howitzers, 500 tanks and 1,000 drones among other heavy weapons, a Ukrainian presidential assistant said on Monday.  Western countries have largely promised this but deploying them takes time.

“We can’t afford to let up and we can’t lose steam.  The stakes are too high,” Austin said.  “We must intensify our shared commitment to Ukraine’s self-defense and we must push ourselves even harder to ensure that Ukraine can defend itself, its citizens, and its territory,” Austin added.

The Biden administration then announced a fresh infusion of $1 billion in weapons for Ukraine, with the package including anti-ship rocket systems, artillery rockets, and rounds for howitzers.

Regarding the battle for Severodonetsk, Austin said, “Ukraine is facing a pivotal moment on the battlefield… Russia is using its long-range fires to try to overwhelm Ukrainian positions,” Austin said.

Russia’s UN Ambassador Vassily Nebenzia accused Western countries of “fighting a proxy war with Russia,” telling reporters: “I would like to say to the Western countries supplying weaponry to Ukraine, the blood of civilians is on your hands.”

--In Severodonetsk, Ukraine continued to ignore Russia’s ultimatum to surrender. The mayor of the city, Aleksandr Stryuk, said Russian forces were trying to storm the city from several directions but the Ukrainians continued to defend it and were not totally cut off, even though all its river bridges had been destroyed.

An estimated 500 civilians, including 40 children, remain alongside soldiers inside the Azot chemical factory, sheltering from weeks of almost constant Russian bombardment.

--Europe’s option for filling its natural-gas stores to avoid a winter energy crisis are narrowing as flows from Russia decrease and U.S. shipments are poised to stall.

Russia’s Gazprom said Wednesday that flows through the Nord Stream pipeline to Germany would fall further, a day after it cut exports on the route by 40%.

Further concerning gas traders already on edge due to the war in Ukraine, Gazprom cut the volume of gas sent to Italy by 15% compared with Tuesday. And an unseasonably early heat wave across parts of Spain and France added to concerns, prompting more gas buying as demand for electricity needed to power air conditioning spiked.

Benchmark European gas prices jumped 24% Wednesday, with the market up 52% over the past week, pushing prices to more than four times their level from a year ago.

--Russian Economy Minster Maxim Reshetnikov said that this year’s economic recession in Russia could be significantly less deep than previous estimates.  “We can say that inflation (in Russia) will clearly be much lower than the estimates… It is quite possible that we will look at the May data, and the depth of the decline may be a bit lower than we thought,” he said.  Russia’s central bank last week cut its key interest rate to the pre-crisis level of 9.5% and kept the door open to further easing as inflation slowed.”

[But Friday, the head of the country’s largest lender, Sberbank, warned that it could take more than a decade for Russia’s economy to return to 2021 levels.]

--Thursday….

The leaders of Germany, France and Italy appeared in Kyiv, vowing to support Ukraine’s bid to join the European Union.  French President Emmanuel Macron said all four EU leaders present (the fourth Romanian President Klaus Iohannis) supported the idea of granting an “immediate” EU candidate status to Ukraine.

After holding talks with President Zelensky, the leaders signaled that Ukraine should be granted European Union candidate status, a symbolic gesture that would draw Kyiv closer to the economic bloc.

Chancellor Olaf Scholz said Germany had taken in 800,000 Ukrainian refugees and would continue to support Ukraine as long as it needed to.  “Ukraine belongs to the European family,” he said.

The three leaders have all been criticized in the past by Kyiv for support viewed as too cautious.

--In an interview with French television as he visited Kyiv, Macron said Ukraine alone should decide whether or not to accept any territorial concessions towards Russia in view of ending the war.

“This is up to Ukraine to decide,” Macron said, when asked what concessions, including on its territory, Ukraine should accept, adding: “I think it is our duty to stand by our values, by international law and thus by Ukraine.”

--NATO Sec. Gen. Stoltenberg condemned “a relentless war of attrition against Ukraine” being waged by Russia, and said NATO continued to offer “unprecedented support so it can defend itself against Moscow’s aggression.”

--Friday….

In an interview with the BBC, Russian Foreign Minister Lavrov said Russia is “not ashamed of showing who we are” as the leaders of Germany, France and Italy visited Ukraine and offered it the hope of EU membership.

“We didn’t invade Ukraine, we declared a special military operation because we had absolutely no other way of explaining to the West that dragging Ukraine into NATO was a criminal act,” Lavrov said.

“Russia is not squeaky clean. Russia is what it is. And we are not ashamed of showing who we are,” Lavrov added.

The head of the UK’s armed forces, Admiral Sir Tony Radakin, said Russia has already “strategically lost” the war and is now a “more diminished power.”

Radakin said Vladimir Putin had lost 25 percent of Russia’s land power for only “tiny” gains.  In an interview with PA Media, he said Russia was running out of troops and advanced missiles and would never be able to take over all of Ukraine.

--The European Union gave its blessing for Ukraine and its neighbor Moldova to become candidates to join the bloc, reaching out deep into the former Soviet Union for what would be a major geopolitical shift.

“Ukrainians are ready to die for the European perspective,” European Commission President Ursula von der Leyen told a news conference, wearing Ukrainian colors.  “We want them to live with us the European dream.”

--British Prime Minister Boris Johnson, under fire at home, appeared in Kyiv today, his second trip there since the invasion.  Johnson greeted President Zelensky as a “great friend” and offered to launch a major training operation for Ukrainian forces, with the potential to train up to 10,000 soldiers every 120 days.

“My visit today, in the depths of this war, is to send a clear and simple message to the Ukrainian people: the UK is with you, and we will be with you until you ultimately prevail.”

--A Russian warship early on Friday twice violated Danish territorial waters north of the Baltic Sea island of Bornholm where a democracy festival attended by senior lawmakers and business people was taking place, the Danish Armed Forces said.  Denmark called the action an unacceptable provocation.

--Ukraine said its forces hit a Russian naval tugboat with two Harpoon missiles in the Black Sea, the first time it has claimed to have struck a Russian vessel with Western-supplied anti-ship weapons.

Some commentary….

David Ignatius / Washington Post

“Russian military advances in eastern Ukraine this month have raised growing concerns in the West that the balance of the war is tipping in Moscow’s favor. But Biden administration officials think these fears are overblown, and that Ukrainian defenses remain solid in this ugly war of attrition.

“ ‘We share the concerns, but for now we believe the Ukrainians are well-positioned and equipped to hold off the advances, while the Russians have their own sustainment challenges,” a senior administration official told me Tuesday.

“Ukrainian officials have argued that they need more heavy weapons, fast, to hold the line against the Russian offensive in Luhansk and Donetsk provinces in the east.  To take just one example, Mykhailo Podolyak, a senior Ukrainian official, tweeted this week that his country needs 300 multiple-launch rocket systems, or MLRS – nearly 30 times what’s on the way.

“The example illustrates a weapons-supply problem that worries many American experts.  Just four MLRS rocket launchers have actually been delivered, officials say, with eight more arriving soon. ‘Twelve is not enough.  Not even close,’ counters retired Lt. Gen. Ben Hodges, who commanded U.S. Army troops in Europe.  ‘It seems like we keep pulling our punches, and all that does is prolong the war.’

“Stephen Hadley, a former national security adviser to President George W. Bush, told me he agrees that administration needs to accelerate weapons deliveries.  ‘We’re not in the ballpark of what we need to stop the Russians,’ he contends.  ‘It’s like we’re measuring in teaspoons rather than pouring in buckets-full.’

“Administration officials are right that this isn’t a time for panic about Ukraine.  But President Biden needs to demonstrate, in a way that gets attention in Kyiv and Moscow, that he is truly prepared to deliver on his promise to give Ukraine ‘the means to deter and defend itself against further aggression,’ as he put it in his May 31 op-ed in the New York Times.  He can underline that statement by providing Ukraine with more weapons, more quickly, as it battles a brutal Russian offensive.

“Pentagon officials say that more weapons are coming, in future presidential drawdowns from U.S. supplies. But they caution that delivery and training take time.  The first Ukrainian MLRS team is scheduled to complete training on Wednesday, and it will be deployed next week, according to officials briefed by the Pentagon.  Another Ukrainian team will start training as soon as the first one finishes.

“The Ukrainians also complain that they don’t have enough heavy artillery and are running out of ammunition for the tubes that they do have.  Pentagon officials say the situation is more complicated.  The Ukrainians are indeed short of ammo for their old, Soviet-era artillery, which fires 152 mm shells.  The United States has scoured the globe looking for shells to fit these tubes, and has prodded producers in former Warsaw Pact nations, such as Bulgaria and Romania, to restart production.

“To provide Ukraine with reliable artillery, the Pentagon two months ago began shipping modern, American-made M777 howitzers, which fire 155 mm shells.  The United States has delivered more than 100 of them, and the total from all Western suppliers is about 200 tubes – equivalent to the firepower of 10 artillery battalions. The Ukrainian artillery barrages have been so intense that several dozen of the M777 tubes have burned out and are being repaired.

“Ammunition for the M777 howitzers appears adequate, officials briefed by the Pentagon say….

“Meanwhile, Russian losses of soldiers and equipment have been staggering.  The Pentagon estimates that the Russians have lost 2,600 armored vehicles, or about 30 percent of their inventory.  That includes about 1,000 tanks and 1,600 armored personnel carriers.  The Russians have also fired nearly 70 percent of their precision-guided munitions, and because of Western sanctions, Moscow may be unable to resupply those critical munitions.

“From the first days of the war, Pentagon officials have feared that the Ukrainians could be encircled in the east in a classic ‘double encirclement’ pincer movement. But Ukrainian counteroffensives have disrupted the Russians at the two points of the pincer, Kharkiv near the Russian border and Kherson near the Black Sea.  The Russians haven’t responded nimbly.

“ ‘The Russians don’t have the ability for the maneuver warfare they would need for a massive breakthrough,’ Hodges told me Tuesday.  He argues that Russian performance in this war shows they lack the command-and-control, logistics and integrated air-land tactics for such a complex assault.

“The crucial variable in this long, brutal war may be ‘strategic patience,’ in the words of retired Australian Army Maj. Gen. Mick Ryan [Ed. who I wrote of last week].  The Ukrainians aren’t winning right now, but they aren’t losing, either. And they should have a lot more weapons arriving soon.”

Editorial / Washington Post

“During Joseph Stalin’s ‘Great Terror’ of the 1930s, an unexpected knock on the door invoked dread.  The arbitrariness of arrests and executions in the middle of the night was frightening. This is why the latest news from Russia about opposition leader Alexei Navalny is so disturbing. He was moved from his prison cell, and no one else was told.

“The point of such shadowy maneuvers is to induce fear – of the unknown and of losing touch.  As another political prisoner, Post contributing columnist Vladimir Kara-Murza, noted recently, the greatest anxiety in prison is to be forgotten. This was certainly what Russian authorities intended when they transferred Mr. Navalny from a penal colony in Pokrov, 74 miles east of Moscow, to a notorious maximum-security facility in Melekhovo, more than twice as far from the capital….

“When a lawyer went to see Mr. Navalny at Pokrov on Tuesday, he was told ‘there is no such convict there.’  Mr. Navalny’s lawyers said they did not know his whereabouts.  Later, a prison monitoring official said he had been taken to Melekhovo.  The Post’s Mary Ilyushina reports media investigations have found systematic abuse of prisoners by guards and other convicts at the facility.  Mr. Navalny’s spokeswoman, Kira Yarmysh, has called it ‘a monstrous place.’

“The treatment of Mr. Navalny shows yet again that Mr. Putin has shifted from soft authoritarianism to totalitarianism.  Russia has not been a state governed by the rule of law for a long while, but Mr. Putin is taking it back to dictatorial times….

“As for Mr. Navalny, it is clear Mr. Putin would like the world to never hear from him again. The Russian president wants to break his most troublesome critic. That makes it even more vital that everyone else speak up for Mr. Navalny, so his voice continues to be heard until the day he walks free.”

Biden Agenda

--In a sit-down interview with the Associated Press on Thursday, President Biden said a U.S. recession isn’t inevitable and acknowledged that aides warned him about the inflationary risk of his flagship relief bill, while insisting that he won’t soften his stance on Russia even if it costs him re-election.

The president said he was told by Treasury Secretary Janet Yellen and others that his Covid aid packaged, passed 15 months ago, could have a marginal impact on inflation, adding that he doesn’t think it did.  “The idea (that the package) caused inflation is bizarre,” said Biden.

Biden reiterated his message that the U.S. was “in a stronger position than any nation in the world to overcome this inflation,” and also said a U.S. recession is “not inevitable.”  At the same time, he acknowledged that Americans are “really, really down” on the state of the country.

“The need for mental health in America, it has skyrocketed, because people have seen everything upset – everything they’ve counted on upset,” he said.  “But most of it is the consequence of what’s happened, what happened as a consequence of the Covid crisis.”

Biden noted that his sanctions campaign against Russia and soaring fuel costs could bring a political cost.  “I’m the president of the United States.  It’s not about my political survival.  It’s about what’s best for the country.  No kidding.”

“I’m convinced that if we let Russia roll and Putin roll, he wouldn’t stop.”

I agree with this last bit.

--One of the biggest reasons that gasoline prices have been surging is that there aren’t enough refineries to turn crude oil into gasoline. 

So President Biden sent letters to seven of the top refiners with operations in the U.S. – Exxon Mobil, Chevron, BP, Shell, and three others, and criticized them for profiting from high gasoline prices, and cajoled them to help him find solutions to those prices.  It repeats a pattern for Biden…be sharply critical of oil companies while asking for their help.  The tactic hasn’t worked and there is zero reason to think it will work this time.

High gasoline prices, like $5.00 for a national average, are a killer politically.  But the world has an undersupply of oil, as demand has been rising as the pandemic eases and more people travel, which is forcing countries to use crude they had previously stocked away in storage.  But too much demand and too little supply leads to rising prices.

[The demand side of the equation could be in the process of reversing somewhat.]

And right now, global refining capacity has contracted by about 3 million barrels a day since the start of the pandemic, a large drop in a world using about 100 million bpd.

Several refineries had to close or shrink because of economic stress as lockdowns destroyed demand for fuel, and others closed because they were converting to more climate-friendly fuels.  More recently, U.S. refineries pivoted to making diesel after Russia’s invasion of Ukraine, so they could send diesel to Europe to make up for a loss of Russian supplies.  That left them with less capacity to make gasoline and caused the amount of gasoline in storage in the U.S. to drop to multiyear lows.  Refinery margins, in turn, have soared.

So the president is bitching at the reduced refinery capacity, which is ironic, because one of his first actions when he took office was to cancel the Keystone XL pipeline from Canada, which I said at the time was incredibly stupid, and oil executives have said has made it harder for them to get their products to consumers.  And then Biden attempted to restrict new drilling leases on public lands.  It was an anti-oil message, part of an assault on fossil fuels, and now he’s begging for help.  Too bad, Joey.

Exxon Mobil did say it is trying to help by expanding capacity as much as it is able to.

Editorial / Wall Street Journal

“Chevron CEO Mike Wirth said recently that refineries are shutting down or being repurposed for renewable fuels because ‘the stated policy of the U.S. government is to reduce demand for the products that refiners produce.’ When companies are told that demand for their product will become obsolete, it’s no surprise that they don’t invest in supply.

“In his letter Mr. Biden orders the refiners to increase supply pronto, but they have to make business decisions based on long-term market expectations.  The same is true for oil producers. The President slams refiners for reaping record profits. Does he not understand markets?  Refining petroleum is a low-margin business, and the companies lost money early in the pandemic as demand for gas and other fuels fell.  Now margins have widened as demand rises again and the industry’s capacity to produce them has shrunk.

“The refining shortage was also predictable for those who follow events in California.  Environmental regulations there have driven refineries to shut down and convert to biofuels, driving up prices and refiner profits….

“Mr. Biden demands that refiners propose ‘concrete ideas’ to immediately increase capacity.  How about his administration stop trying to put them out of business?”

--Saudi pro-government commentators were gloating over President Biden’s planned visit next month, saying his about-face on his vow to make Saudi Arabia a “pariah” reflected the kingdom’s important in global affairs.

The White House confirmed on Tuesday that Biden would meet de facto ruler Crown Prince Mohammed bin Salman on a trip to the region, that will begin in Israel.

The president had refused to deal directly with Prince Mohammed following a U.S. intelligence report implicating MBS in the killing of journalist Jamal Khashoggi.

Former Saudi intelligence chief and senior royal Prince Turki al-Faisal blasted critical remarks, carried in U.S. media, about the prince and the kingdom’s human rights record and suggested Biden was trying to save his presidency.

“It is the tanking popularity of the president that brings him to us. It is his legitimacy that he hopes to bolster by meeting with our crown prince,” Prince Turki wrote in an op-ed published in the Saudi newspaper Arab News over the weekend.

But then today, Friday, Biden said he was not going to have a meeting with MBS during his trip and that he was only seeing the Saudi crown prince as part of a broader “international meeting.”

--A bipartisan group of Senators, including enough Republicans to overcome the chamber’s “filibuster” rule, on Sunday announced an agreement on a framework for potential gun safety legislation.  The bill included support for state “red flag” laws, tougher background checks for firearms buyers under 21 and a crackdown on a practice called “straw purchases,” but not other limits Democrats and President Joe Biden had advocated for, such as raising the age for buying semiautomatic rifles to 21 or new limits on assault-style rifles.

Ten Republicans signaled their support for the preliminary deal, indicating the measure potentially could advance to a vote on passage and overcome roadblocks by other Republicans who oppose most gun control measures.

[Four of the Republicans are retiring – Roy Blunt, Pat Toomey, Rob Portman and Richard Burr.]

“Our plan saves lives while also protecting the constitutional rights of law-abiding Americans,” the group, led by Democrat Chris Murphy and Republican John Cornyn, said in a statement.  “We look forward to earning broad, bipartisan support and passing our commonsense proposal into law.”

President Biden has called for banning the sale of assault weapons and high-capacity magazines, or, if that were not possible, raising the minimum age to buy those weapons to 21 from 18.

This has a long way to go before becoming law, but virtually all are in agreement, it’s better than nothing.

--A flood stopped infant formula production at an Abbott Laboratories’ facility less than two weeks after the major supplier got back up and running following contamination concerns, but the Food and Drug Administration said there will be enough of the product to meet demand.

The facility had just reopened earlier this month after an FDA inspection that began in February found unsanitary conditions.

Wall Street and the Economy

Until this week, it was expected that the Federal Reserve’s Open Market Committee would hike the benchmark interest rate some ½-point, 50 basis points, at its latest confab Tuesday and Wednesday.

But then the story leaked Monday that it was going to be 75 basis points, in spite of Chair Jerome Powell saying 75 was “off the table” at the last Fed meeting.  And so 75 it was.

In its statement accompanying the hike in the funds rate, the Fed said in part:

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.

“The invasion of Ukraine by Russia is causing tremendous human and economic hardship.  The invasion and related events are creating additional upward pressure on inflation and are weighing on global economic activity.  In addition, Covid-related lockdowns in China are likely to exacerbate supply chain disruptions.  The Committee is highly attentive to inflation risks.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run.  In support of these goals, the Committee decided to raise the target range for the federal funds rate to 1-1/2 to 1-3/4 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities… The Committee is strongly committed to returning inflation to its 2 percent objective.”

In his press conference after, Fed Chair Powell emphasized the unusual nature of a three-quarter point rate increase – the first since 1994: “I do not expect moves of this size to be common.”  But he did leave open the possibility that one more similarly sized hike could be coming in July.  That acknowledgement leaves little question the Fed has moved into a new stage in its inflation fight.

“Inflation has obviously surprised to the upside over the past year, and further surprises could be in store,” Powell said. “We therefore will need to be nimble in responding to incoming data and the evolving outlook.”

The Fed’s new estimates now show the Funds rate reaching 3.4% by the end of the year, which would be another 1.75 points of increase from today’s target rate of 1.5% to 1.75%.  [Or 75 bps in July, 50 in September, 25 and 25 in Nov. and Dec., potentially.]

Powell admitted that last week’s consumer price data, as well as the University of Michigan’s survey of consumer inflation expectations, was “quite eye-catching, and we noticed that,” the Chair said. “One of the factors in our deciding to move ahead with 75 basis points today was what we saw in inflation expectations,” in addition to the hotter-than-expected rise in consumer prices.

But the Fed’s forecast is for inflation to hit 2.6% in 2023, which doesn’t seem realistic – barring recession.  A jobless rate rising to only 3.9% in 2023 from 3.6% today, another projection, isn’t either.

The Fed’s actions came as Tuesday saw the release of the May producer price data, up 0.8%, and 0.5% ex-food and energy. For the year, headline was 10.8%, and the core came in at 8.3%.  The highs were set in March at 11.5% and 9.6%, respectively.

Ergo, while a very slight improvement, still very disconcerting…wholesale prices eventually trickling down to the consumer.

May retail sales unexpectedly fell 0.3%, +0.5% ex-autos.  Retail sales were up a revised 0.7% in April, so further evidence that May was a real transition month as in a major change in consumer attitudes, owing to inflation.

May housing starts badly missed expectations, falling 14.4% from the previous month to a 1.549 million annual rate, well below consensus of 1.71 million, to the lowest level since April 2021.

May industrial production was less than forecast, +0.2%.

Put it all together, and the Atlanta Fed’s GDPNow barometer for second quarter growth is flat…unchanged…0.0%.  Not good.  Reminder, the economy contracted 1.5% in the first quarter.  If we tip negative in Q2, that’s a classic definition of recession, two negative quarters in a row, earlier than expected.

Europe and Asia

Central banks in Britain and Switzerland followed America’s Federal Reserve in raising interest rates, and thus spooked markets further.  The Bank of England increased interest rates by 0.25 percentage point, a fifth consecutive hike, taking its policy rate to 1.25%, but its Swiss counterpart raised rates by a half-point, the first increase since 2007.

The ECB, which announced last week its intention to raise interest rates in July, was forced to address the growing spreads between the likes of German and French paper vs. that of Italy, Greece and Spain that threatened a replay of the debt crisis that almost brought down the single currency a decade ago. 

So the ECB held an emergency meeting on Wednesday and said it would speed up work on a “new tool” to tackle fragmentation in the eurozone.

I’m not sure if this is a Craftsman Power Tool, or a gardening implement, but, whatever, it worked some.

Understand, as I’ve noted over the years, particularly in recent weeks, the spread between the Italian and German 10-year bonds had generally settled in the 120-130 basis point range, but then it spiked this week to 220, 2.20%.  Wednesday’s statement did have an impact, even if details on this special tool were lacking, and at week’s end the yield on the German bund was 1.65% and the Italian 10-year 3.57%, or 192 basis points.

But ECB President Christine Lagarde also tried to temper expectations, arguing that the ECB’s job is taming inflation, not helping budgets, the likes of Italy, Spain and Greece having mammoth debt-to-GDP ratios vs. the likes of Germany and the Netherlands.

On the data front, May inflation in the euro area hit 8.1%, up from 7.4% in April.  A year earlier, the rate was 2.0%.  Ex-food and energy, the rate was 4.4% vs. 0.9% May 2021. [Eurostat]

Germany 8.7%, France 5.8%, Italy 7.3%, Spain 8.5%, Netherlands 10.2%, Ireland 8.3%.

We also had a reading on April industrial production, up 0.4% over March, down 2.0% year-over-year.

Britain: In a super controversial move, the UK government has published plans to scrap parts of the post-Brexit deal it agreed to with the EU in 2019.

It wants to change the Northern Ireland Protocol to make it easier for some goods to flow from Great Britain to Northern Ireland.

But the EU opposes the move, saying going back on the deal breaches international law.

The protocol is the part of the Brexit deal which keeps Northern Ireland in the EU’s single market for goods.  It prevents a hard border with the Republic of Ireland, but it means checks on some good arriving into Northern Ireland from other parts of the UK – a situation opposed by unionists* in Northern Ireland who argue it creates a trade border in the Irish Sea.

*The opposition, led by Sinn Fein, accuse the government of creating more instability and uncertainty in the North.

The government’s plan involves the concept of green lanes and red lanes for trade, a green lane meaning no checks and paperwork would be minimal.

Parliament is to rule on the legislation.

Because of the cost of living crisis across Europe due to the war in Ukraine, there is no appetite amongst EU leaders for a full-blown trade war with the UK, and the EU has tried not to overreact to the UK’s proposal, but unilaterally overriding large parts of the protocol agreed and signed by Prime Minister Boris Johnson is seen as a very big deal in Brussels.

Meanwhile, Johnson is barely hanging on to power as his second ethics adviser in less than two years quit his post.

France: Round two of France’s complicated parliamentary election process is this weekend.  In last week’s first round, President Emmanuel Macron’s alliance lost ground, but is looking to secure 255-295 seats in the National Assembly, well down from the 350 it now holds…289 needed to retain the majority.

Turning to Asia…China released a slew of key economic figures for May and they were generally a little better than expected, despite the lockdowns in key cities.

Industrial production was up 0.7% year-on-year, retail sales down 6.7% Y/Y, and fixed asset investment was up 6.2% for the first five months of the year vs. the same period in 2021.  The unemployment rate in May was 5.9%, vs. 6.1% in April.

In Japan…industrial production in April was -1.5% vs. March, -4.9% Y/Y.

On the trade front, May exports rose 15.8% from a year ago, while imports were up 48.9% (think fuel).  Exports to the U.S. increased 13.6%.

Meanwhile, the Bank of Japan cut against the grain, keeping its interest rates at virtually zero, which sent the yen plunging further against the dollar.

Street Bytes

--Rising rates and recession fears are not a good mix for stocks, which had a second straight brutal week, the Dow Jones and S&P 500 at their lowest levels since Dec. 2020, Nasdaq on Thursday hit its lowest since Sept. 2020.  All three are down 9-10 percent+ for the past two weeks.

The S&P after Thursday’s close was down 24% from its record high.  Nasdaq was down 34%.  Both gained a bit today.

For the week, the Dow lost 4.8% to 29888, the S&P 5.8% (worst since March 2020), and Nasdaq 4.8%.  The S&P MidCap and Russell 2000 fell 7.6% and 7.5%, respectively, which gives you a further sense of the carnage.

--U.S. Treasury Yields

6-mo. 2.20%  2-yr. 3.17%  10-yr. 3.23%  30-yr. 3.27%

It was an incredibly volatile week, with the yield on the 10-year going from last Friday’s 3.16% to 3.49% on Tuesday, the highest level since 2011, only to fall the rest of the week on global growth fears.

The 2-year at one point this week was at its highest mark since 2007.

When the 10-year was nearing 3.50%, a 30-year fixed rate mortgage hit 6.28%, before sliding back to 6.03% today.

--Oil prices initially rose after the United States announced new sanctions on Iran, and as energy markets stayed focused on supply concerns that have sent prices soaring this year.  In addition, Libya’s oil output has collapsed to 100,000-150,000 barrels per day, a fraction of the 1.2 million bpd seen last year.  The market had slipped earlier as interest rate hikes in the U.S., Britain and Switzerland fed worries about global economic growth.

The International Energy Agency said it expects demand to rise further in 2023, growing by more than 2% to a record 101.6 million barrels per day.  Optimism that China’s oil demand will rebound as it eases Covid-19 restrictions is also supporting prices.

But by the end of the week, oil, as measured by West Texas Intermediate, had fallen back to below $110, $109.77, on worries that interest rate hikes by central banks could slow the global economy and cut demand.

--Jaewon Kang and Annie Gasparro / Wall Street Journal

“From farmers and factories to grocery stores and restaurants, many executives say they are experiencing jaw-dropping cost increases for labor, packaging, ingredients and transportation.  The rise of fuel prices is making it more expensive to produce and sell food. Food retailers and restaurants have said they are passing along some wholesale price increases and additional costs to consumers….

“Russia’s invasion of Ukraine, one of the world’s top-grain-producing regions, is lifting the price of pantry staples, cooking oils and livestock feed for meat.  Bad weather affecting other big crop-producing countries, including in parts of South America, Australia and India, is fueling the global crunch, too.”

A week ago, the Labor Department said grocery prices rose 11.9% in May over the past year.  Restaurant prices increased 7.4%.

Kraft said it’s raised prices 13.9% since 2019.  Campbell Soup Co. told retailers it would soon implement its third round of price increases in the past year.

McDonald’s is trying to figure out how much it can raise prices as they face rapidly escalating costs, particularly for fuel.

--Speaking of groceries, Kroger raised its annual outlook after the supermarket chain’s fiscal first-quarter results, announced Thursday, topped Wall Street’s estimates on the back of sustained demand for at-home food consumption.

The company forecasts identical sales (without fuel) to grow 2.5% to 3.5%, a little above earlier guidance.

“Our team is doing an outstanding job managing costs in an inflationary environment,” CEO Rodney McMullen said in a statement.  Elevated costs have hit quarterly earnings of retailers like Target and Walmart, but McMullen said Kroger is “well positioned” to continue “driving sustainable returns for shareholders.”

Sales for the quarter ended May 21 totaled $44.6 billion, compared with $41.3 billion a year earlier and the consensus of $43 billion.

Trends in eating at home helped deliver a strong quarter, the company said.

--Shares in FedEx Corp. surged 14% after the company boosted its dividend and added board members under pressure from activist investor D.E. Shaw Group, moves that come after longtime CEO Fred Smith stepped aside as CEO.

FedEx results have been squeezed as the pandemic boom in package volumes eases and as the company faces rising labor costs.  The company will report earnings results next week.

D.E. Shaw is a hedge fund with an activist component that has pressed for changes at giants such as Exxon Mobil, though it tends to avoid proxy fights through nonbinding handshake agreements.

--Boeing CEO Dave Calhoun said on Monday that industrywide demand for airplanes is strong and will continue to improve as airlines work to replace aging fleets, buy more efficient models and continue to see passenger growth.

“Demand for airplanes is as robust as I’ve ever seen it.  I think it will get more robust,” Calhoun told reporters at an event at Boeing’s office.  The demand for airplanes “is more than a bubble,” he added.

Well, Mr. Calhoun, who hasn’t gotten anything right, will be wrong again, as the airlines pull back orders once they’ve realized that the coming global slowdown, or worse, will put a major crimp on demand.

--As the summer of travel chaos unfolds in Europe, a pilot union at the French arm of Air France-KLM called for a one-day strike next week in a further sign of labor strife.

The union, which set a date of June 25, is protesting what it describes as mounting safety risks as the carrier raises capacity during the busy season.

Paris airport unions have separately called for a day of labor action July 2 to demand higher pay.

--TSA checkpoint travel numbers vs. 2019

6/16…87 percent of 2019 levels
6/15…87
6/14…86
6/13…88
6/12…90
6/11…90
6/10…87
6/9…89

A second straight week well below 2019 levels.

--Bitcoin, that “store of value,” sneered the editor, reached its lowest level in 18 months this week, as investors fled cryptocurrencies and stocks in a broader selloff of risk assets.  By week’s end, some $600 million was erased in the cryptocurrency market since last Friday, partly due to macro factors such as inflation.

Sunday evening, Hoboken-N.J.-based crypto firm Celsius Network said it was pausing customer withdrawals from its platform “to stabilize liquidity and operations while we take steps to preserve and protect assets.”  At least for now, billions of dollars’ worth of crypto in the firm, which some customers treat as a bank, is trapped. 

Bitcoin fell 14% in response to about $23,500.  Ether fell 15%.  And then cratered further after, with Bitcoin finishing the week at around $20,600.

Celsius is one of a small number of companies that pays a yield on crypto deposits.  It does that by reinvesting customers’ assets, and securities regulators have said the company puts customer funds in loans to institutional investors, trades for its own account, and has a crypto-mining operation, among other activities.

U.S. regulators have long had Celsius in their sights for allegedly selling unregistered securities to investors.

Unlike assets in a bank, crypto deposits aren’t federally insured, boys and girls.  So, when and if customer withdrawals are allowed again, there’s nothing to prevent a run on the company.

Binance, a Chinese crypto exchange, also blocked bitcoin withdrawals due to “a stuck transaction causing a backlog.”  Other such operators are doing the same.

By the way, if you want a good bar in Hoboken, directly across from the PATH station (and a few blocks from Celsius), try Texas Arizona, my go to place for all my beer and burger needs. 

You’ve long known how I’ve felt about this sector, and I’ve gotten a kick out of bank executives, who were long skeptical and then rushed to meet the needs of a very small potential client base with phrases such as “it’s all about the blockchain technology behind crypto.”

If the blockchain technology was so secure, then why has $billions in bitcoin, and other crypto currencies, been stolen?

But I get it.  Blockchain, otherwise, is about delivering information at record speeds.  Such as this from IBM’s website, explaining this ‘can’t do without’ technology, the editor typed sarcastically:

“To speed transactions, a set of rules – called a smart contract – is stored on the blockchain and executed automatically.  A smart contract can define conditions for corporate bond transfers, include terms for travel insurance to be paid and much more.”

Wow, I’m so impressed. 

“As each transaction occurs, it is recorded as a ‘block’ of data.

“Those transactions show the movement of an asset that can be tangible (a product) or intangible (intellectual).  The data block can record the information of your choice: who, what, when, where, how much and even the condition – such as the temperature of a food shipment.”

To cite the great ex-NBA player Derrick Coleman, “Whoopty-damn-do.”

But, to be fair, “Each additional block strengthens the verification of the previous block and hence the entire blockchain.  This renders the blockchain tamper-evident, delivering the key strength of immutability. This removes the possibility of tampering by a malicious actor – and builds a ledger of transactions you and other network members can trust.”

So I go back to the beginning.  Why has $billions in bitcoin been stolen through ‘malicious actors’?

Anyway, blockchain technology is not going to change the world in any measurable way, nor will cryptocurrencies.  This ain’t no wheel or electricity, or semiconductor, sports fans.

One more…Coinbase, America’s biggest cryptocurrency exchange, announced it was laying off 18% of its workforce amid the market meltdown.  Brian Armstrong, the CEO, said the “crypto winter” could last for “an extended period” and would shrink trading revenues, the company’s biggest source of income.  He also conceded that Coinbase had grown too quickly during the crypto boom.

“We appear to be entering a recession after a 10+ year economic boom,” Armstrong wrote in a letter to employees. “A recession could lead to another crypto winter, and could last for an extended period.  In past crypto winters, trading revenue has declined significantly.”

Coinbase shares peaked at $368 last Nov. 9 and closed the week at $51.

--Shares in Vornado Realty Trust hit a pandemic-era low this week, as the slide in CEO Steven Roth’s real estate firm underscores growing concern on Wall Street that, 27 months after remote work became reality, workers won’t return to New York offices in anything like their pre-pandemic numbers.  Vornado’s 23 million square-foot portfolio is mostly Manhattan office buildings.

Industrywide, Manhattan office vacancy rates remain elevated at 15% and headline gross rents for prime space are 10% below 2019 levels, Morgan Stanley said in a June 1 report.  And now costs are rising rapidly as interest rates increase, and it’s expensive to renovate offices to make them more inviting to tenants.

As for Steven Roth, he is looking for a green light to build several new office towers around Penn Station.  New York’s governor, Kathy Hochul, is counting on the project’s tax revenue to pay for rebuilding the dismal transportation hub.

Analysts feel that such a project would command rents 40% more than today, which is why Roth calls his stock “stupid cheap,” adding he is confident Manhattan offices will fill up again.

But can Roth’s new buildings command top dollar when the market is saturated with supply and prospects for refilling older buildings aren’t promising, as some analysts say?

And…nearly two-thirds of its $6 billion in mortgages are floating rate.

--Caterpillar is moving headquarters from its longtime base in Illinois to the Dallas-Fort Worth area in Texas, joining a growing list of manufacturers that have relocated over the past year or plan to do so.

CAT’s new HQ in its existing office in Irving, Texas, a suburb of Dallas, will serve as the new global headquarters.

While Caterpillar has had a presence in Texas since the 1960s, Illinois is home to the largest concentration of CAT employees.

Tesla and software giant Oracle both relocated to Austin from California in the past year, with Hewlett Packard and Toyota Motor also moving there in the past few years.  The Lone Star state is known for cheaper living costs, lower taxes and less stringent regulation.  But it is also known for a highly-iffy power grid.

Separately, Virginia is another popular destination for companies moving headquarters, particularly the defense and aerospace industry, because of its proximity to the federal government and engineering talent.

--Tesla raised prices across its lineup by up to $6,000, Elektrek reported, as global automakers grapple with surging costs for raw materials.  Separately, the company has cut job postings by 14% since CEO Elon Musk warned he was worried about the economy, needed to reduce staff and would pause hiring worldwide.

Meanwhile, Musk warned Twitter staffers its business needed to “get healthy” and undergo a “rationalization of headcount and expense” as he addressed the social media platform’s employees directly for the first time since launching his $44 billion takeover bid.

Speaking to its 8,000-strong workforce via a smartphone video (and ten minutes late), Musk on Thursday laid out a bold vision for Twitter’s future if he succeeds in taking the company private.  Musk also touched on issues including content moderation, remote work and aliens.

The billionaire said he wants to build a user base of at least 1 billion people globally, up from its current 229 million monetizable daily active users.

Doing so would mean ensuring people are not “harassed” on Twitter, Musk said, while also adding an array of features to emulate Chinese platform WeChat, a “superapp” where users can send messages, payments, shop or book taxis in one place.  The Tesla CEO also made a nod to a second Chinese-owned app, TikTok, which he said had successfully ensured its content was not “boring” – and that Twitter should follow in its footsteps.

--Speaking of Oracle, on a terrible day for tech shares, Monday, Oracle came through with better-than-expected results for the company’s fiscal fourth quarter ended May 31, and strong guidance for the next fiscal year, and in after-market trading the shares surged 12%.

Oracle posted revenue of $11.8 billion in the quarter, up sharply from $10.5 billion reported in the February quarter, and ahead of the company’s guidance, which called for 3% to 5% growth as reported.

CEO Safra Catz noted in a call with analysts that it was the company’s best organic growth (ex- impact of acquisitions) since 2011.

Oracle said total cloud revenue was $2.9 billion, up 19%.  The company has been making a big push to drive customers for both its database and applications business to the cloud, while growing the Oracle Cloud infrastructure business, which is trying to compete for customers with Amazon Web Services and Microsoft Azure.

Catz said the company’s cloud business should grow more than 30% in the May 2023 fiscal year.

For the full year, Oracle had revenue of $42.2 billion, up 5%, and the highest growth rate in more than a decade.

--Special purpose acquisition company (SPAC) Digital World Acquisition Corp. disclosed on Monday that financial regulators were probing its deal with former President Donald Trump’s social media firm and have sought more information, while warning this could potentially delay the deal.

The company signed a deal in October to merge with Trump Media & Technology Group Corp., the creator of social media platform Truth Social.  The SEC and others have been investigating the transaction since late last year.  They’ve been seeking documents on communications between Digital World and TMTG, including the identification of banking, telephone, and email addresses and the identities of certain investors.

When the deal was announced, shares in DWAC, which had closed at $10 on Oct. 20, soared to $175, intraday, two days later.  The stock closed at about $28 this week.

--The New York Philharmonic said that in September it will restore the salaries and overtime rates of its musicians to their pre-pandemic levels. An agreement reached Monday between the philharmonic and Local 802 of the American Federation of Musicians, the union that represents the orchestra’s musicians, brings the minimum weekly salary back to $2,952.

Any pay increases that musicians received for seniority will be restored, but as inflation has seen prices rise 13.2% since the pandemic began, the raises won’t give musicians the same buying power as before.

Understand the philharmonic was forced to suspend performances an unprecedented 18 months during the pandemic. When the shutdown began, the philharmonic cut wages to 75% of their base pay as part of a four-year contract signed in December 2020.

--“Jurassic World Dominion” kicked butt at the domestic box office last weekend, opening to $143.4 million, according to estimates from Comscore.

Internationally, the latest film in the “Jurassic” franchise earned $176.6 million.

“Top Gun: Maverick” declined only 44% in its third weekend with an estimated $50 million to take second place, bringing its North American total north of $393 million.

Nealy half of the audience for “Dominion” was 18 to 34 years old, while 31% were 35 and above.

The Pandemic

--An FDA advisory panel approved Moderna and Pfizer vaccines for children ages 5 and under on Wednesday.

The Moderna vaccine for tots is administered over a two-dose regime. Each dose is 25% of an adult dose.  Studies found the vaccine is effective at preventing severe illness but only prevents moderate infection at a 40% to 50% rate.

Pfizer has been a step or two ahead of Moderna throughout the vaccine rollout, but its initial two-dose regime for toddlers proved to be ineffective, so Pfizer’s vaccine for kids under 5 requires three doses. Each of the three doses is one-tenth of the adult Pfizer vaccine.

The FDA’s vaccine honcho, Dr. Peter Marks, said 442 children under age 4 have died from Covid since the beginning of the pandemic. He noted that serious infections worryingly increased among the youngest Americans during last winter’s Omicron surge.

--Beijing’s Covid-19 bar outbreak is still “developing” and the city’s epidemic control is at a “critical juncture,” a health official said Monday.  A total of 228 Covid cases had been reported in the bar cluster, officials having begun warning of the “explosive” outbreak Saturday. Various districts were renewing tightened Covid curbs in the capital.

--North Korea on Thursday reported the eruption of another infectious disease in addition to its ongoing Covid-19 outbreak, saying leader Kim Jong Un has donated his private medicines to those stricken with the new disease.  [Jack Daniels, Johnnie Walker Black…]

It’s unclear how serious the new epidemic is, but some outside observers say North Korea likely aims to burnish Kim’s image as a leader caring about public livelihoods as he needs greater public support to overcome pandemic-related hardships.

Kim on Wednesday offered his family’s reserve medicines for those diagnosed with “an acute enteric epidemic” in the southwestern Haeju city, the official Korean Central News Agency reported.

KCNA didn’t elaborate on exactly what the epidemic is and how many people have been infected.

--Dr. Anthony Fauci tested positive for Covid on Wednesday. He was said to be battling mild symptoms.

--Canadian Prime Minister Justin Trudeau said on Monday that he had tested positive for Covid – his second bout with the illness this year – but that he was feeling OK and isolating. Trudeau was at the Summit of the Americas in California last week, where he met with President Biden and other leaders.  He returned to Ottawa on Saturday.  The White House said Biden was not a close contact.

Covid-19 death tolls, as of early tonight….

World…6,339,026
USA…1,038,059
Brazil…668,892
India…524,817
Russia…380,333
Mexico…325,340
Peru…213,361
UK…179,537
Italy…167,658
Indonesia…156,679
France…149,039

Canada…41,717

U.S. daily death tolls…Mon. 145; Tues. 385; Wed. 312; Thurs. 195; Fri. 106.

Foreign Affairs

China: Beijing launched its third and most modern aircraft carrier, a watershed moment for President Xi Jinping’s efforts to modernize the armed forces and narrow his country’s military gap with the U.S.

The new carrier, the “Fujian,” was launched from a shipyard near Shanghai on Friday.  Sadly, I know the name Fujian all too well…but that’s my problem.   The ship has an electromagnet catapult launch system – a feature previously deployed only by the U.S. – rather than the “ski jump” deck of China’s two earlier carriers, China Central Television said.

The Fujian will more closely resemble the newest U.S. carrier, the USS Gerald R. Ford, but will likely fall short of Nimitz-or-Ford-class nuclear-powered supercarriers in capabilities and range.  The Chinese warship was thought to have a diesel engine and likely to be comparable in size to the USS Kitty-Hawk-class carriers, which the U.S. operated from the 1960s to 2000s, experts say.

The carrier launch is particularly important when it comes to the Taiwan Strait, with Chinese officials having privately told the U.S. that the Strait might actually be China’s territory.  That was Sunday. Then Monday, a spokesman for Beijing’s foreign ministry said, “There is no such thing as international waters in international maritime law,” Wang Wenbin said, adding, “Relevant countries claim that the Taiwan Strait is in international waters with the aim to manipulate the Taiwan question and threaten China’s sovereignty.”  The foreign ministry then said the same day that it is only China that “has sovereignty, sovereignty rights and jurisdiction over the Taiwan Strait.”

U.S. officials countered on Tuesday by affirming the Taiwan Strait is in fact an international waterway, with State Department spokesman Ned Price saying in a statement: “The Taiwan Strait is an international waterway, meaning that the Taiwan Strait is an area where high seas freedoms, including freedom of navigation and overflight, are guaranteed under international law.”  The entire world, Price said, has “an abiding interest in peace and stability in the Taiwan Strait, and we consider this central to the security and prosperity of the broader Indo-Pacific region.”

In recent years, U.S. warships, and on occasion those from allied nations such as Britain and Canada, have sailed through the Strait, drawing Beijing’s anger.

For its part, Taiwan firmly rejected Beijing’s characterization of the Strait, saying it stands by U.S. freedom of navigation activities in international waters.

“The Taiwan Strait is an international waterway, which is outside of our territorial waters, and is fit for the principle of freedom of navigation in the open sea,” said foreign ministry spokeswoman Joanne Ou, adding the island respected any movements of foreign vessels in the Taiwan Strait that abided by international law, including innocent passage.

Meanwhile, at the Shangri-La Dialogue, an annual conference of defense ministers in Singapore focused on security in the region, world leaders said the Russia-Ukraine war has implications for the Asia-Pacific region and international order.

Taiwan, like Ukraine, is threatened by a larger neighbor who views it as part of its territory, which Chinese Minister of National Defense, Gen. Wei Fenghe, said.

“Let me make this clear.  If anyone dares to secede Taiwan from China, we will not hesitate to fight.  We will fight at all costs. And we will fight to the very end.”

Japanese Prime Minister Fumio Kishida said at the conference’s opening keynote address: “No country or region in the world can shrug this off as someone else’s problem. It is a situation that shapes the very foundations of the international order, which every country and individual gathered here today should regard as their own affair.  Ukraine today may be East Asia tomorrow.”

Gen. Wei also said China is developing its nuclear arsenal – a move he said was appropriate given the state of international security.

U.S. Defense Secretary Lloyd Austin said China was taking a more aggressive approach to territorial claims and that its military was increasingly engaging in provocative behavior, including around Taiwan.

Gen. Wei said: “We request the U.S. side to stop smearing and containing China. Stop interfering in China’s internal affairs.  The bilateral relationship cannot improve unless the U.S. side can do that,” Wei dressed in the uniform of a general in the People’s Liberation Army.

North Korea: Pyongyang last Sunday fired multiple artillery shots, in another show of force a day after Kim Jong Un vowed to boost the reclusive nation’s military power. 

South Korean Defense Minister Lee Jong-sup said on Sunday that his country would dramatically enhance its defense capabilities and work closely with the United States to counter North Korea’s various threats.

Random Musings

--Presidential approval ratings….

Gallup: 41% of President Biden’s job performance, 54% disapprove; 39% of independents approve (May 2-22).

Rasmussen: 42% approve of Biden’s performance, 57% disapprove (June 17).

A new Reuters/Ipsos poll gave Biden a 39% approval rating, 56% disapproval.

--There were two telling congressional Republican primaries in South Carolina on Tuesday.

Tom Rice, a five-term incumbent, was beaten in his primary by Trump-backed challenger Russell Fry, a state legislator.  Rice was one of 10 Republicans to side with Democrats days after the Capitol riot on Jan. 6.

But another Republican in the state, Nancy Mace, comfortably won her vote after criticizing Trump.

--Adam Laxalt, a former state attorney general who has embraced lies about the 2020 election, won the Republican nomination for a pivotal Nevada Senate seat, setting up what will likely be a fierce race against incumbent Catherine Cortez Masto, one of the most endangered Democrats.

Republicans see the race as their best opportunity to flip a Senate seat and regain the majority.

--In line with the above, the Washington Post had an extensive piece on the primary elections thus far, prior to this Tuesday, and at least 108 candidates for statewide office or Congress who have repeated Trump’s election lies have won their primary races.

Embracing the false claims remains a winning formula in this year’s GOP contests, and as the majority of the election-denying candidates who have secured their nominations are running in districts or states that lean Republican, according to Cook Political Report ratings, they are likely to win the offices they are seeking.

Many of these will hold positions of power that would enable them to interfere in the outcomes of future contests – such as blocking certification of election results, or changing the rules around the awarding of their states’ electoral votes or to acquiesce to litigation attempting to set aside the popular vote.

--The House committee investigating the Jan. 6, 2021, attack on the U.S. Capitol set out to prove in Monday’s second public hearing that former President Trump knew he lost the 2020 election to Joe Biden but lied to the American people with wild election fraud claims against the advice of top aides.

“He lost,” said Rep. Bennie Thompson (D-Miss.), the bipartisan committee’s chairman.  “But he betrayed the trust of the American people. He ignored the will of the voters.  He lied to his supporters and the country, and he tried to remain in office after the people had voted him out.”

The star of Monday’s hearing was former Attorney General Bill Barr, and to a lesser extent, campaign manager Bill Stepien.

Stepien said he recommended that Trump use any election night speech to say votes were still being counted and it was too early to call.

“The president disagreed with that.  He thought I was wrong.  He told me so.  He was going to go in a different direction,” Stepien said.

Instead, the committee said, Trump leaned on the advice of Rudy Giuliani to claim he won.  The committee characterized Giuliani as “inebriated,” a claim supported by Trump adviser Jason Miller, who told the committee, “The mayor was definitely intoxicated.”

Rep. Liz Cheney (R-Wyo.), committee vice chair, pointed to evidence that Trump “knew before the election” that mail ballots – crucial in closely contested battleground states Pennsylvania, Michigan and Wisconsin – would favor Biden.

Leading up to Election Day 2020, observers repeatedly warned of a “red mirage” that would show Trump initially leading but a “blue shift” favoring Biden as more mail ballots were counted.  Biden dominated votes cast by mail after Trump spent months attacking the practice.

Trump exploited those dynamics on election night, multiple witnesses told the committee.

“That seemed to be the basis for this broad claim that there was major fraud,” Barr said.  “And I didn’t think much of that because people had been talking for weeks and everyone understood for weeks that was going to be what happened on election night.”

Barr said that “right out of the gate” on election night Trump started making claims of voter fraud “before there was actually any potential evidence.”

Stepien told the committee that he told Trump to prepare for a “long night” and a counting process that could take days and instead Trump declared victory anyway.

Over and over, Trump was told by his campaign team and top advisers that his claims of voting fraud were false and based on misinformation, to no avail.

“All the early claims that I understood were completely bogus and silly and usually based on complete misinformation,” Barr said.

Many of the outlandish allegations concerned voting machines produced by Dominion Voting Systems and claims votes were being taken from Trump and given to Biden.  Barr called the Dominion allegations “complete nonsense.”  And “I thought, ‘Boy, if he really believes these things, he’s become detached from reality.’”

Barr dismissed claims of fraud as “bullshit,” “idiotic” and “crazy stuff.”  “There was never an indication of interest in what the actual facts were,” he said.

Barr concluded: “After the election, he didn’t seem to be listening.”

On a different topic, committee members argued that Trump, despite knowing his claims about the election were false, nonetheless raised $250 million from campaign donors, including $100 million in the first week after the election to continue fighting the results.

Rep. Zoe Lofgren (D-Calif.), said the Trump campaign “misled” campaign donors that their money would be used for election fraud claims.  But instead of supporting litigation, she said funds went to a Trump-backed political action committee called Save America PAC.

“So not only was there the big lie, there was the big rip-off,” Lofgren said.  “Donors deserve to know where their funds are really going.  They deserve better than what President Trump and his team did.”

Meanwhile, there was no evidence that an “Election Defense Fund” actually existed.  Former Trump campaign staff member Hanna Allred called it a “marketing tactic.”

Lastly, Al Schmidt, the only Republican on Philadelphia’s elections board who became a target of attacks after he defended the integrity of the 2020 vote, also appeared and dismissed allegations about his state.

“Not only was there not evidence of 8,000 dead voters voting in Pennsylvania – there wasn’t evidence of eight,” he said.

--Hours after the Jan. 6 committee held its second public hearing Monday, former President Trump released a 12-page statement repeating many of the same false election fraud claims that the panel says led to the violent insurrection.

In it, Trump suggested that the bipartisan committee’s televised presentation of evidence is an attempt by Democrats at distracting from numerous issues weighing on President Biden’s administration, including inflation and the baby formula shortage.

“They are desperate to change the narrative of a failing nation,” Trump said.  “They are hoping that these hearings will somehow alter their failing prospects.”

Trump said little of the content of Monday’s hearing. 

Much of Trump’s statement was filled with dozens of footnotes, many of which were attributions to “2,000 Mules,” a documentary directed by Dinesh D’Souza that purports to have “smoking gun” evidence of massive voter fraud.  In his testimony, AG Barr said he had seen no evidence to support that the election was stolen, “including the ‘2,000 Mules’ movie.”

Trump concluded his statement by suggesting the Jan. 6 hearings are “merely an attempt to stop a man that is leading in every poll, against both Republicans and Democrats by wide margins, from running again for the Presidency.”

--The Jan. 6 committee then held another hearing Thursday and turned its attention to former Vice President Mike Pence. 

The hearing depicted an increasingly ominous campaign by Trump to pressure Pence to illegally block the transfer of power to Joe Biden.  Evidence presented by committee members illustrated with stark detail the alleged violent intent of some Trump followers – stirred up by Trump’s speech and social media postings – and how on Jan. 6 some came within 40 feet of Pence as he fled.

But just as darkly, testimony by Greg Jackob, who was Pence’s chief counsel, and J. Michael Luttig, a conservative legal icon and former federal appellate judge, focused on another man – Trump lawyer John Eastman.

Eastman was one of the alleged architects of what the committee called Trump’s plan to stay in power, proposing ways in which Pence could violate the Constitution to Trump’s benefit, witnesses said.

As the hearing ended, Luttig – who called Trump a “clear and present danger” to American democracy – was asked to reflect on what lay ahead.  His response: “The former president, his allies and supporters pledge that in the presidential election of 2024, if the former president or his anointed successor as the Republican Party presidential candidate were to lose that election, that they would attempt to overturn that 2024 election in the same way they attempted to overturn the 2020 election – but succeed in 2024 where they failed in 2020.”

--Maureen Dowd / New York Times

“It never for a moment crossed Donald Trump’s mind that an American president committing sedition would be a debilitating, corrosive thing for the country.  It was just another way for the Emperor of Chaos to burnish his title….

“(The Jan. 6 committee’s prime-time hearing) drove home the fact that Trump was deadly serious about overthrowing the government. If his onetime lap dog Mike Pence was strung up on the gallows outside the Capitol for refusing to help Trump hold onto his office illegitimately, Trump said, so be it.  ‘Maybe our supporters have the right idea,’ he remarked that day, chillingly, noting that his vice president ‘deserves it.’ ….

“Breaking from her father, Ivanka Trump – in a taped deposition – said she embraced (AG) Barr’s version of reality: ‘I respect Attorney General Barr.  So I accepted what he was saying.’….

“Trump just couldn’t stand being labeled a loser – his father’s bete noire. He maniacally subverted the election out of pure selfishness and wickedness, knowing it is easy to manipulate people on social media with the Big Lie.

“It was fine with him if his followers broke the law and attacked the police and went to jail, while he praised their ‘love’ from afar.  Its amazing that no lawmakers were killed….

“It’s mind-boggling that so many people still embrace Trump when it’s so plain that he cares only about himself. He was quick to throw Ivanka off the sled on Friday, indicating her opinion did not count and she ‘was not involved in looking at, or studying, Election results. She had long since checked out.’….

“In his dystopian Inaugural speech, Trump promised to end ‘American carnage.’ Instead, he delivered it.  Now he needs to be held accountable for his attempted coup – and not just in the court of public opinion.”

Editorial / New York Post

“Trump has become a prisoner of his own ego. He can’t admit his tweeting and narcissism turned off millions.  He won’t stop insisting that 2020 was ‘stolen’ even though he’s offered no proof that it’s true.

“Respected officials like former Attorney General Bill Barr call his rants ‘nonsense.’  This isn’t just about Liz Cheney. Mitch McConnell, Betsy DeVos, Mark Meadows – they all knew Trump was delusional. His own daughter and son-in-law testified it was bull.

“Trump’s response?  He insults Barr and dismisses Ivanka as ‘checked out.’  He clings to more fantastical theories, such as Dinesh D’Souza’s debunked ‘2,000 Mules,’ even as recounts in Arizona, Georgia and Wisconsin confirm Trump lost.

“Meanwhile, reports that Trump was pleased that the Jan. 6 crowd chanted for Vice President Mike Pence to be hanged – a truly reprehensible sentiment – makes him unworthy for the office.  Trump can’t look past 2020.  Let him remain there.”

Editorial / New York Daily News

“Hang Mike Pence’s portrait in the gallery of national heroes. As riveting testimony from Thursday’s Jan. 6 hearing showed again and again, it was Donald Trump’s once obsequious wingman who found a backbone and rejected every illegal effort to block Joe Biden’s victory….

“The testimony of former Federal Judge Mike Luttig and the VP’s former counsel Greg Jacob established clearly that they and the man they advised, Pence, were true to the Constitution and the Republic in the dark days of December and January… Pence, Luttig and Jacob followed the law, not the wants of one crazy man in the Oval Office.

“The men who put country over party are rock-solid conservative Republicans….

“Compare their fealty to due process and representative democracy with the ravings of ‘Dr.’ Eastman, who was prescribing a poisonous prescription that would kill the patient. Eastman contended that the VP had the power to accept or not accept the results from any state….

“Under this theory, then-veep Al Gore could have declared himself the victor over Bush.  And Kamala Harris would now be empowered to pick the next president, election be damned.  Even Eastman would later realize it was phony as he sought a pardon from Trump (he didn’t get one).”

Peggy Noonan / Wall Street Journal

“The November election will be good for Republicans, how good we’ll see. The presidential cycle then begins. The Biden administration from Afghanistan through inflation denialism hasn’t been a success. The economy won’t get better in time for 2024.  My guess is little will.

“In this atmosphere a normal upstanding Republican or a normal accomplished conservative would beat whatever the Democrat ticket is.

“It is only Mr. Trump who would surely lose.

“He lost in 2020 by seven million votes with a growing economy and no inflation – and that was before the events of 1/6.

“America isn’t going to elect him again. They’re not going to let that guy back in that house.  Because everyone knows it: Let Donald Trump back there and he’ll do a 1/6 again. Because while his followers love America, he doesn’t. He likes it as far as it goes, appreciates it as the stage for his greatness, but beyond that…

“Trump voters: Call an audible again.  Look at the field and the facts, be strategic. Donald Trump, in the 2016 primaries, tended to win with about a third of the vote.  In a field of 17 that was enough.  It’s looking like the GOP field could be larger than expected in 2024, and of course Mr. Trump could run again and win the nomination again.  It will be easier for him if past Trump voters fail to think strategically, and if donors big and small don’t move early to winnow the field.

“Here is the Republican tragedy of the past seven years: In 2016 only Donald Trump could have beaten Hillary Clinton. And of all GOP primary candidates that year, only Donald Trump couldn’t govern, because he had no interest in governance and is himself ruled by emotions and impulses as opposed to judgment. He is sort of a 1950s caricature of a woman.  Actually I suppose I mean he’s colorfully masculine yet not at all manly – a screaming meemie instead of a steady bomber pilot.  I say this not to be gratuitous but because his nature dictated his actions on 1/6 and before, and will again.

“Why doesn’t the party get someone who can govern now?  Why not try to know reputable power, right what needs righting, put competent people in charge?

“Serious people will know to move more quicky this cycle than they have in the past.

“So that’s what I tell Trump voters: Be serious.  Move quickly.  Let go of the anvil that, in the most buoyant waters imaginable, will sink you to the bottom of the sea.”

--From the Jan. 6 hearing on Thursday:

Trump tweeted at 2:24 p.m. that “Mike Pence doesn’t have the courage to do what should have been done to protect our country” as rioters surged past lawn enforcement officers and began marching through the Capitol.

“Did Donald Trump ever call the vice president to check on his safety?” Rep. Pete Aguilar asked Greg Jacob.

“He did not,” Jacob replied.

--A new Yahoo News/YouGov poll shows that most Democrats (55%) and Republicans(53%) now believe it is “likely” that America will “cease to be a democracy in the future” – a stunning expression of bipartisan despair about the direction of the country.  Yours truly is definitely in the “likely” category as well.

--We have a new drinking game.  Every time you hear Georgia Republican senate candidate Herschel Walker has fathered a child out of wedlock, you have to chug a beer.  We seem to be up to three, suddenly.

The revelations come in the middle of Walker’s competitive race to unseat Democratic Sen. Raphael Warnock, with Walker often talking about absent fathers in the Black community.

“I want to apologize to the African-American community, because the fatherless home is a major, major problem,” Walker said in a September 2020 interview, adding in a December 2019 interview with Diamond and Silk that men need to go into neighborhoods and become “fathers of those fatherless” children.

A day after the Daily Beast broke the news that Walker had a secret 10-year-old son he fathered out of wedlock, he confirmed late Wednesday night that he has yet another son with a different woman that the public doesn’t know about – as well as a daughter that he had in college.

His involvement with the three appears to be minimal, at best.

--I hope none of you were planning a trip to Yellowstone National Park this summer, as many were.  Historic floodwaters have “dramatically” altered the park, as more than 10,000 visitors had to be evacuated amid a train of thunderstorms that led to dangerous floods, mudslides and rockslides, causing extensive damage to roads and bridges, as well as power outages.  Rapid snowmelt didn’t help when the rains came.

The record-level floods left all five entrances to the park closed at least a week, and much of it for months, wiping out the summer season.

The historic floodwaters pushed a popular fishing river off course – possibly permanently – and many roadways will need extensive rebuilds.

“The landscape literally and figuratively has changed dramatically in the last 36 hours,” said Bill Berg, a commissioner in nearby Park County.

Yellowstone is celebrating its 150th anniversary this year. Some party. 

Ironically, days earlier saw the 50th anniversary of the nearby 1972 Black Hills Flood in South Dakota.  I am most familiar with this area and have been to a museum in Rapid City commemorating the flooding which many of us of a certain age recall seeing on television, the awful destruction from 15 inches of rain in six hours (after above-normal rain in the days leading up to the deluge), which led to a major dam collapse.

238 people died, and over 3,000 were injured, scores seriously.  Hundreds of people survived by hanging onto trees until they could be rescued.

Thankfully, last I saw, there were no deaths in the Yellowstone flooding.

--The heat hit early…before mid-June, record high temperatures in Arizona, Nevada, New Mexico, Texas, and parts of the Midwest and South.  Phoenix, last weekend, reached 113 degrees on Friday, surpassing a previous mark of 111.  Las Vegas set a record at 109.  Death Valley, California, hit 120 for the first time this year.  Denver hit s record 100 on Saturday.

My friend Johnny Mac, who lives near Myrtle Beach, S.C., told me to check out his heat index on Monday, 109, for June 13.

The biggest thing we’ve seen with global warming, and perhaps the most worrisome, is that in the heat waves, the overnight temps don’t seem to go down nearly as much as in the past.

Meanwhile, the Colorado River’s reservoirs have diminished to the point that significant cuts to the water supplied to the seven states that rely on it will be necessary next year, a federal official of the Bureau of Reclamation, Camille Touton, told the Senate Energy and Natural Resources Committee on Tuesday.  Maintaining “critical levels” at the largest reservoirs in the U.S. – Lake Mead and Lake Powell – will require large reductions in water deliveries.

“A warmer, drier West is what we are seeing today,” she said at a hearing. “And the challenges we are seeing today are unlike anything we have seen in our history.”

Colorado, New Mexico, Utah, Wyoming, Arizona, California, and Nevada all receive water from the Colorado River and next year will see a decrease of between 2 million and 4 million acre-feet of water due to the ongoing drought that has gripped most of the Western U.S. (An acre-foot is the amount of water needed to cover one acre of land in one-foot-deep water.)

“What has been a slow-motion train wreck for 20 years is accelerating, and the moment of reckoning is near,” John Entsminger, general manager of the Southern Nevada Water Authority, told the Senate hearing.  “We are 150 feet from 25 million Americans losing access to the Colorado River, and the rate of decline is accelerating.”

 

---

Gold $1840
Oil $109.77

Returns for the week 6/13-6/17

Dow Jones  -4.8%  [29888]
S&P 500  -5.8%  [3674]
S&P MidCap  -7.6%
Russell 2000  -7.5%
Nasdaq  -4.8%  [10798]

Returns for the period 1/1/22-6/16/22

Dow Jones  -17.8%
S&P 500  -22.9%
S&P MidCap  -21.9%
Russell 2000  -25.8%
Nasdaq   -31.0%

Bulls  29.4
Bears 42.7

Hang in there.

Happy Father’s Day!

Brian Trumbore

 

---